The Canadian government reports that Canada was in recession during the first half of 2015. The Canadian economy is especially sensitive to to movements in the oil price given the prevalence in oil extraction in the economy of late, but recession in Canada is a reason for concern among other advanced economies.
After all, Canada is a first-world industrialized economy, and not some rickety one-note economy. Moreover, Canada is the US’s largest trading partner with exports to Canada comprising about 20 percent of all exports.
As with the US, Canada doesn’t know if it is “officially” in recession until after the fact, but at the moment, US GDP figures for the second quarter are well above negative territory, coming in at over 3 percent. So, unless those are revised way, way downward, the US can’t meet the definition of recession in the third quarter unless both the third and fourth quarters come in as negative.
That’s certainly a possibility of course, and those who remember the 2007-2009 recession will recall that few would have placed the economy in recession in late 2007 based on the overall “feeling” in the economy. Indeed, in late 2007, things seemed to be humming along just fine, and certainly very few hit the panic button until the fall of 2008. Indeed, presidential contenders like John McCain, during the 2008 race, were falling all over themselves to tell us how strong the economy was, and Ben Bernanke predicted in May 2007 that:
“we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well.”
And on January 10, 2008, after the US had already entered into recession, Bernanke said: “The Federal Reserve is not currently forecasting a recession.”
So, is the US in recession now? Only time will tell. And while history does not repeat itself, here’s an interesting slide show from the BLS on the 2007-2009 recession.
